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Recommendations from the 55th GST Council Meeting

Aditya Narayan Parida
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Highlights of Recommendations from the 55th GST Council Meeting

The 55th GST Council meeting, chaired by Union Finance Minister Smt. Nirmala Sitharaman, took place in Jaisalmer, Rajasthan. Key attendees included Union Minister of State for Finance Shri Pankaj Chaudhary, Chief Ministers, Deputy Chief Ministers, Finance Ministers from various states and UTs, and senior officials. This pivotal meeting led to critical decisions on GST rate changes, compliance improvements, trade facilitation, and legal clarifications.

Goods

  1. Fortified Rice Kernel (FRK): GST reduced to 5%.
  2. Gene Therapy: Exempted from GST.
  3. LRSAM Systems: Extended IGST exemption on parts and software under Notification 19/2019-Customs.
  4. Merchant Exporters: Compensation Cess reduced to 0.1% for supplies to align with GST rates.
  5. IAEA Imports: IGST exemption granted for equipment and consumables under specific conditions.
  6. Food Preparations for Free Distribution: Concessional 5% GST extended under government schemes.

Services

  1. Sponsorship Services: Brought under the Forward Charge Mechanism.
  2. Motor Vehicle Accident Fund Contributions: GST exemption granted.
  3. Hotel and Restaurant Services: Revised GST structure based on actual value of supply, effective April 1, 2025.
  4. Commercial Property Renting: Excluded composition levy taxpayers from reverse charge mechanism (Notification No. 09/2024-CTR).

Other Goods and Services Changes

  1. Old Vehicles: GST rate increased to 18% on sales of used vehicles (on margin value).
  2. ACC Blocks: Clarified 12% GST for those with over 50% fly ash content.
  3. Agricultural Produce: Exemption confirmed for agriculturist-supplied pepper and raisins.
  4. Pre-Packaged Commodities: Revised definition to include retail sales up to 25 kg/litre.
  5. Popcorn Taxation: Tax rates clarified based on type and composition.
  6. Payment Aggregators: RBI-regulated entities confirmed as eligible for exemptions, excluding payment gateways.
  7. Penal Charges: GST not applicable on penal charges by banks and NBFCs.
  1. SEZ/FTWZ Transactions: Treated as neither goods nor services under Schedule III of CGST Act.
  2. Voucher Taxability:
    • Transactions in vouchers not treated as supply.
    • GST applicable on commissions for principal-to-agent voucher distributions.
    • Clarified non-taxability of unredeemed vouchers (breakage).
  3. Circular Clarifications:
    • No ITC reversal required for e-commerce supplies under Section 9(5).
    • ITC claim clarified for goods delivered at the supplier’s premises in Ex-Works contracts.
    • Late fee waiver for delayed GSTR-9C filings (2017-18 to 2022-23).
  1. Track and Trace Mechanism: Legal framework for evasion-prone commodities via Unique Identification Marking.
  2. Online Services Compliance: Mandated state name recording for unregistered recipient supplies.
  1. Plant and Machinery Definition: Amended retrospectively for clarity.
  2. Appeal Provisions: Reduced pre-deposit for penalty-only cases to 10%.
  3. Local and Municipal Fund Definitions: Explicit definitions introduced.
  4. ISD Mechanism: Inter-state RCM transactions included under ISD provisions.
  5. Temporary Identification Numbers: Enabled for non-registered persons making payments.
  6. Invoice Management System (IMS): Legal framework enhanced for generating GSTR-2B and credit note adjustments.
  1. IGST Settlement: States’ issues to be addressed by March 2025.
  2. GSTAT Rules: Operational procedures under review.
  3. Natural Disaster Levy: Group of Ministers to examine a uniform policy.
  4. Municipality Charges: Further examination required on GST applicability for FSI charges.

Conclusion

The GST Council’s recommendations aim to refine the GST framework, enhance compliance mechanisms, and address trade facilitation. These decisions will be formalized through notifications and amendments, ensuring a streamlined GST regime for stakeholders.

Stay tuned for further updates as these recommendations are implemented.

Press Release

Also Read: Guidance Note 2/2024: Direct Tax Vivad Se Vishwas Scheme, 2024

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